Minting the digital currency has become a big, ruthlessly competitive business
Jan 10th 2015 | BODEN, SWEDEN |
A HUGE aircraft hangar in Boden, in northern Sweden, big enough to hold a dozen helicopters, is now packed with computers45,000 of them, each with a whirring fan to stop it overheating. The machines (pictured) work ceaselessly, trying to solve fiendishly difficult mathematical puzzles. The solutions are, in themselves, unimportant. Yet by solving the puzzles, the computers earn their owners a reward in bitcoin, a digital crypto-currency
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What happens in the wake of the bitcoin price collapse is unclear. The long queues for mining rigs have dispersed. Demand for renting cloud-based hashing-power is stagnant. Many equipment-makers have ended up running the machines for their own benefitand selling some of their stock of bitcoins to cover costs. Some people say this is why the currency has kept falling. People in the industry are already discussing at what price mining becomes unprofitable. But Mr Cole is unfazed. Where others see a weak price, he just sees all the bitcoin yet to be mined, and lots of struggling rivals set to exit the business. He recently raised $14m in venture capital, looking forward to a bigger slice of a less competitive market. If other miners do give up, the difficulty of the puzzles may fallso winning bitcoins would get easier.
The impact of the technology is already astounding -- it's forced private-sector prototyping of enormously scaled processing like this. I don't think it's going away. It seems to be perfectly fit for the reality of an information-technology-based civilization.
And I don't think it's a wholly good thing. But it's a damned big thing.